Rising costs of coal could spur solar power in India

India is the fifth largest electricity consumer in the world and the second fastest growing economy. With such a large market, the country’s progression toward renewable energy takes on added significance. According to Bloomberg, a recent report from KPMG suggests this change could happen sooner than many anticipate.

Current electricity prices average around 5.42 rupees, roughly 12 cents, per kilowatt hour, less than half the price of solar energy. However, India largely relies on fossil fuels for its energy, primarily coal. The country has long been a net importer, but the gap between domestic production and demand is growing steadily larger. Particularly as demand grows among other developing economies, the price of importing energy looks to rise as well.

KPMG suggests that under these conditions solar power could reach grid parity as soon as 2017. The government has announced a goal of installing at least 120,000 megawatts of solar panels by that year, but KPMG thinks the market alone could produce nearly 60,000 megawatts worth of developments within five years of reaching grid parity.

While coal provides the vast majority of India’s electricity production, hydroelectricity currently accounts for much of the remainder.